economic collapseSo I logged-on to the Yahoo finance page the other day and I came across a main page headline that was a genuinely perfect specimen.  No, it wasn’t the “Eight Hottest NFL Wives” or “Superfood that boosts your sex drive” that caught my eye.  The headline I read, carefully placed in the dead-center of the page to draw your eye, blared “THE LESSONS OF GOLD’S COLLAPSE”.
Intrigued by the fact that a 29% pullback in 2013 after a monster 500% twelve year bull run could be called a “collapse”, and wondering what sage lessons I might learn from this, I clicked… and was treated to such an outstanding example of a drive-by hit piece that I thought it would be fun to outline all of the techniques used in this article, and frankly many MSM articles, on gold.  I think there are actually some valuable lessons to be learned from this thing, but I doubt they are the ones the author wanted me to take from it.  So rather than take apart the mistakes of the article one by one (which was largely done in the comments section of the piece by some of the more informed readers), instead let’s examine the standard characteristics of a pedestrian MSM hit piece on gold.


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An Overhyped Negative Headline

Much can be learned about the intentions behind an article by examining the descriptive words chosen.  Knowing that most casual investors will only scan the headlines, the descriptor in the heading will communicate 90% of the intended message. “The Lessons of Gold’s Collapse” communicates that something ruinous has happened to gold, so terrifying that one needs to learn a lesson from it!  Note that a 50% drop in the entire equities market was a “correction”, a 40% drop in a specific stock is a “pullback”, but a 29% drop in gold over the course of a year is a “collapse”.

A few short years ago, Bank of America went from over 19 dollars per share to less than five dollars per share.  Did Bloomberg run headlines describing what happened to BAC as a “collapse” or offer snarky articles talking about what the duped investors in BAC should have learned from the loss of more than 70% of shareholder value?  Of course they didn’t.  Nor did they chastise equities investors as a whole for losing half the value of their portfolios in the 2008-2009 financial crisis.  And Mr. Ritholtz certainly didn’t write snarky articles accusing investors of “having a huge emotional investment and an unhealthy investment in the narrative”.

It should be noted that more than half of the ten “lessons” offered in this piece aren’t even specific to gold.  Instead, they are standard investing advice (beware of leverage, have an exit strategy, etc) that would apply equally to equities, bonds, real estate, or commodities.

The Pretense of Objectivity

Particularly dismissive articles require a proclamation of neutrality to establish the author’s bona fides. The shopworn pretense is the stance of Hey, I don’t have a dog in this fight, I’m just calling it like I see it. Ritholtz hauls this out early in the piece, proclaiming “As an investor, I am a gold agnostic”.  The evidence, however, strongly suggests otherwise.

The first tell is the descriptors used in the article, as mentioned above.  The prose is stuffed with negative adjectives and descriptions of gold, including “dead money”, “horrific” price drop, “plummeted”, “trounced with repeated massive selloffs”.  The actual article heading at Bloomberg shrieked that gold investors “Lost Their Shirts”!  All this hyperbole for an investment that is UP 50% over the last five years, and 340% over the last ten.  That is one damn fine shirt!

Next, Ritholtz gives away his game when he writes “This column is not an “I told-you-so” or an exercise in “Goldenfreude” (describing a “delight in gold bugs’ collective pain)”. This is a particularly cheap rhetorical trick, one that would earn even a beginning debate student a sharp reprimand from his or her professor. When an author at Mother Jones writes “I am not one to describe the Republicans as stump-toothed inbred hillbillies” it is crystal clear that this is exactly what he is saying. It is the same as a Republican politician saying “I am not one to call my opponent a terrorist sympathizer or say that she is soft on terrorism”.  The pretense of objectivity is even more diminished by the fact that, through the link provided, we learn that Ritholtz actually coined the term Goldenfreude (which ironically would actually translate to something like “golden joy” or “taking joy in gold”… but we know what he meant). This may seem obvious, but one does not sit around coining new terms to describe how sweet it feels when a particular group loses money… unless you are thinking about how sweet it feels when a particular group loses money.

Finally, Ritholtz demonstrates that he is indeed far from an objective observer through an inadvertent admission made via grammatical error.  Look closely at the tenses in the following sentence:

“Challenge anyone’s belief on gold, and instead of having empirical, data-driven counterarguments made, the zealots responded with venom.”

Note that challenge is present tense and impersonal (the voice he was trying to speak in for this piece to pretend to objectivity) while responded is past tense and clearly implies the personal “responded to me”.  The sentence should read “Challenge anyone’s belief on gold… and people will respond with venom” but Ritholz lapses into a more truthful voice by the end of the sentence, telling how people “responded with venom” to what he, the wording suggests, had to say.  Unsurprising, then, that Ritholtz would take delight in gold bugs (those zealots!) collective pain.

 

Cherry-pick the Timeframes to Support the Narrative

So based on its precipitous 39% drop, gold is “speculative and dangerous” according to this article and should serve as a lesson for what NOT to do in a trade. Horrible, right? Well, I guess it was if you bought all of your gold precisely at 2:51 EST on September 8, 2011.  Because that is the exact time you would have had to purchase to achieve the 39% drop used in this article to characterize all gold investing. Neat how that works, isn’t it?

On both a five and ten year timeframe, this “speculative and dangerous trade” as he terms it has outperformed the S&P 500. And the S&P outperforms 60% of all Wall Street money managers in any given year, so it could reasonably be argued that the terms “speculative and dangerous” are more appropriately applied to equities investing in general and to trusting you investments to Wall Street money managers in particular. People like Barry Ritholtz, in fact.

One more thing about timing. Calling something a “bad trade” depends entirely on what your timeframe is for the investment, doesn’t it? If you went long WTI at 43$ / barrel in 2009 and it retreated to 39$ over the next month, would that be a bad trade?  Only if you failed to stay long through the run up to 114$.  Unless someone has a crystal ball and knows for a certainty what future price is eventually going to be, then we really don’t have any idea whether gold is a failed investment at this moment in time, or is simply in the midst of a healthy correction after a 12 year bull run.  That doesn’t stop naysayers from gleefully tap-dancing on gold’s grave after a single, solitary down year, but it doesn’t make them right, either.

Ad Hominem and Dismissal by Definition

Do you know the negative term for people who invest in oil? How about soybean investors, do you know the derisive word used to describe them?  What about the dismissive terms for people who invest in real estate, stocks, or bonds?  Of course not.  Of all investing classes, types, or assets, only investors in gold merit a commonly-known term of derision that is freely used: goldbugs.

There is a good reason for this. Ad Hominem arguments (latin for “to the man”) are a logical fallacy, and are listed as such in every introductory logic or rhetoric course you will ever take.  It means attacking the man, not the argument, and it is a logical fallacy for the simple reason that the quality or characteristics of the person making the argument have no bearing whatsoever on the truth or falseness of the argument being made. Once again, use of this term is a cheap rhetorical trick to distract and mislead the listener, and every time you read it you should instantly be wary of the author’s intent because it reveals they are not arguing in good faith.

This goes hand in hand with “dismissal by definition”, under which you libel those who disagree with you as something horribly bad (racists, fascists, pinkos, etc) in the hope that your audience will simply tune out any argument they might make, thus absolving you from having to make an actual argument based on fact, logic, and reason.  The use of the term “zealot” in this piece to characterize the already negative term “goldbug” is a pitch-perfect exemplar of this technique.  No need to marshal facts or arguments against zealots, eh?

The Credentials Fallacy

One of the more hilarious aspects of this piece was that the author actually attempted to mix it up in the comments section. It was a public forum on Bloomberg, so one might expect a generally uninformed commentary, but I was mildly surprised that at least a significant percentage of comments were well-informed from a PM investing perspective.  Though numerous mistakes, assumptions, and dismissals went largely unchallenged (or at least were not called-out in the way they would have been on this board), there were nonetheless some great points made by commenters.

What was especially amusing, however, was the fact that whenever someone would venture their opinion that the gold bull wasn’t dead, Ritholtz would jump in with some snarky version of “Well, what is YOUR public investing track record? What qualifies YOU to make that prediction?”.  This is a rather sad version of playing the “Do you know who I am?” card… the answer obviously being “I’m Barry Freaking Ritholtz and you’re not”.  In his mind, the only people who are allowed to have an opinion on this matter are those who have posted their investing advice publicly on the internet for the last ten years, all others are unqualified to question his wisdom.

But hypocritically, this doesn’t go both ways.  If you offer your opinion and you agree with Barry, he is fine with that and does not demand your credentials. He may even say “great point”.  If you disagree with him or suggest that it is too early to call the death of the gold bull, he smears you as unqualified to offer an opinion by dint of the fact that you haven’t been publicly posting stock picks for ten years.  I guess some opinions are more equal than others!

Not a shill

Ritholtz notes that he has been called a shill for his anti-gold stance and writings, and I believe this is unfair to him.  A shill would be someone who is paid money specifically to produce an anti-gold hit piece like this, where someone (an editor, webmaster, etc) would contact him and say “We would like you to write a piece bashing gold and here is what we will pay you”. I sincerely doubt this has ever happened.

Barry Ritholtz is therefore not a shill.  He is a whore.  He knows what his employers want to hear without being specifically told, he knows his bread is buttered by producing articles that 1. Pump equities and mainstream investing (preferably creating the illusion that you can thrive in the markets but only if you closely follow Barry Ritholtz), 2. Produce eye-grabbing and mildly sensational headlines to generate clicks and 3. Annoys all the right people, generating just enough controversy to be “interesting” but making sure at the end of the day that alternative asset investors and “goldbugs” in particular are derided and mocked just enough to make sure his employers know where he stands… and he stands foursquare with them, against the barbarians and their barbarous relic.

.   .   .

So there you have it- a pedestrian hit piece on gold that denies inflation, dismisses Chinese accumulation of the second largest (and possibly the largest?) sovereign gold hoard in the world, disses theories of market manipulation, and goes so far as to claim “the gold market has no fundamentals”(apparently supply and demand do not exist for gold). Undoubtedly some will be fooled by this, while others will gleefully jump on the bandwagon because it makes them feel good about themselves and their worldview (including a former TFMR commenter, interestingly).

But one person’s “horrific price drop” is another person’s golden buying opportunity to stack at cheap prices.  I know what I know.  And five to ten years from now, I will be happy to compare my “track record” with Barry to see if I am qualified to comment on one of his articles.  The question would be, why bother?

 

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  1. Very cool. Wasted on the main stream people who watch the main stream media. They just don’t get it.
     
    They are just so well conditioned to be stoic cows eating grass in the field. I shout at them daily. But they just carry on munching away, getting fat, so that the wolves can cut them in two and munch on the their hearts.
     
    Try explaining to one of them that Fiat money is just paper. They look at you as if you have come from Mars. That is how well the system has conditioned people.
     
     
     
     

    • Huh?  Were you talking to me?  Sorry, I was busy staring at my iPhone.
      What was all that mumbo-jumbo about a paper Fiat, and what do those barbaric relics gold & silver have to do with me?
      What’s on TV tonight?

    • Consider this.  Say your grandfather buried two Folgers cans in the back yard in 1932.  One had a twenty dollar bill in it and the other had a 1oz pure gold coin in it.(they would have been almost equal at the time $20.67oz).  Then last week, you uncovered the two cans. Which can would you rather have?  Duh.  BTW, gold was confiscated in 1933 and exchanged for “cash”($20.67oz). Shortly thereafter, the currency was devalued 40% by increasing the value of gold to $35oz.  Getting the picture yet?   

    • And currency devaluation continues after the big gold price drop, only difference is they are hiding it with paper gold/silver dumps to supress the price

    • it’s not Yahoo that “hates” gold so much, it’s the entire mass media system, all the biggies are following the script as they do with any story that is allowed to be “covered”, this gold coverage is the “protect the dollar” script. They are all in it together. When was the last time any of the big media players actually reported something that was in our best interest, that the powers did not want discussed? I can’t remember one except Fukushima coverage for the first two weeks, then they got the “protect the nuclear industry” script and stopped completely. I use Google news as my MSM and they are the same as Yahoo, which is the same as CBS, which is the same as all the rest. Alternative media is the only route to truth these days.

    • Silverslicker, I hear you, but most of the time its just some head reading off a teleprompter. Macke is probably doing the same, it seems like he’s taking pleasure in it more than most, and I suspect he knows more than most talking heads.

  2. Pining 4 the Fjords is one of the good guys over at TFMR. Nice to see him rip gold stooge Barry Ritholtz’s hit piece to shreds.
     
    Unlike most here, I actually read this Yahoo garbage quite a bit (it keeps me sharp for the pro establishment and bankster shills I see around here and elsewhere). We are literally surrounded by lies and propaganda. It’s always good idea to question articles like this to see where you stand. That way you can deliver the factual responses needed to kill the flimsy and erroneous arguments of whores, shills and trolls.

  3. Since we are discussing hit pieces I found this post on another website so it’s not my own but copy / pasted.  I’m curious if anyone can validate what is being stated below:
    The tapering is a fantasy. The Fed is re-investing interest on maturing bonds back into 10 year notes and mortgage securities. It just so happens that the interest exactly matches the amount of the taper = No actual reduction in bond purchases. And if I forgive you for not knowing this, it still leaves a gaping hole in logic, to think the dollar can realistically strengthen a whole lot, given how many have been created, but not released into circulation, and how many more would be created, even if the taper were real.

    http://sgtreport.com/2014/01/who-really-benefits-from-a-stronger-dollar/#comments

    • I agree with that statement and I believe the actual “Fed easing” could be over 200 billion a month when you include derivative involvement. That number, whatever it really is, will be larger moving forward regardless of what we are being told. They can’t stop the scheme or it will all collapse and they want that to happen only when they want it to happen, not a minute sooner. When it does stop, the American engine stops and that wont be very pretty. China will be the new darling nation for the powers to “utilize” going forward, while leaving the U.S. to figure it out. That is where the ammo and the camps come in.

  4. the past 100 years was not normal.  pieces of paper with numbers on them issued by a private bank are not real money.  when i was a kid a COKE cost a nickel, a burger was 15cents, fries were 10cents, this was in 1969 when i went out with my friends at the high school lunch break, we were allowed to drive off-campus, we’d all go out to lunch (being seniors, you know).   no one had car insurance, no one had to buy car insurance; it just wasn’t an issue.   no one had health insurance, it only cost $3 for the G.P. (general practitioner for you young people, before hyperinflation in the ‘medical industry.’)   the point is, when one is as old as i am & remember paying for gasoline with two thin silver dimes, or if it was a good day, the gas stations had a gas war & sometimes the prices were 16cents, or 17cents, I KNOW SOMETHING IS VERY WRONG !!!   My parents paid $18,000 for a house & sold it for $125,000.   just wait til houses collapse in value again.   the desperate seller will be accepting a few gold coins for his real estate.    I am NOT NOT NOT stupid sheeple anymore & my problem is that no one believes me, i’ve been banned from even talking about currency & gold & silver & banks & stocking&stacking by my own family.   i know what’s coming & it’s not pretty for those who don’t have the real money.   
    i’ll never forget when my grandpa brought me home some silver dollars from Hawaii (right around 1960 i reckon).   i deposited them in my measly bank passbook savings acc’t.   one day i wanted to withdraw money & they gave me paper dollar bills !   i was so upset … where are my silver dollars that my grandpa gave me ?   SWINDLE!  CAN YOU SAY THE PAST 100 YEARS HAS BEEN THE BIGGEST SWINDLE IN THE HISTORY OF THE WORLD ?   I CAN.    I’ll never be swindled again by any government or bank ….. EVER!   I’m old & angry at what’s happened to the citizens of this country & the establishment doesn’t like my kind around, hence ……. OBAMACARE to wipe me out early.    (thanks for allowing the rant.  i luv u all.)

    • ” when i was a kid a COKE cost a nickel, a burger was 15cents, fries were 10cents, ”
       
      You’re a few years ahead of me. I can remember when I was 14 (1970) and got my first summer job. Now I had my own money. The first time I went to McDonald hamburger was 25 cents, fries 15 and coke 10 cents. And I still got change back from my dollar after paying the tax of 2 – 3 cents. Today at McDonalds you need more then a dollar to purchase anything from their dollar menu (after paying taxes). When I tell people -even people in their 50″s (my age group) they can’t seems to relate or recall that.
       
      And as far as the silver dollars were concerned I spent those but do you remember the silver certificate? It was a dollar bill that had grave into “silver certificate redeemable for silver”.

    • @lunnybee: I’m sure there’s quite a few people on this site which agree..  We’re in uncharted waters and taking on water. 
      Expect this period to be well documented in numerous books for generations as the Super Debt Cycle that started in the 1970′s and finally went supernova around 2014 – 2016.
      If there’s any silver lining it appears you are much better prepared than the average worker bee.

    • Oh Rah Lynnybee
      you’re words are so true and dead bang on 
      from this 61 year old.
       100 years of Death Bombing of the USA with PAPER DEBT FRNs.  Weaponized Mass Destruction from on high.
       No one will take my silver from me unless I get seriously valuable service in exchange. And it has to be at my price. 
      It is silver, you know and it’s worth something. 
      About the same as it was about 50 years ago. ;-)

    • @lynnybee – you would be welcome in my house any day of the week. You can chat PMs are Ponzi schemes all night long.
      Admittedly it would only be you and me as everyone I know switches off as soon as I start to tell the truth.
      But with a few bottles of wine and some snacks, we could go through the night.
      Rant whenever you want hun :)
      JC

  5. Lol a Silver Dime was worth a lot in my day and went far. I even heard a story that the Grand Canyon was formed by a Scotsman that had lost a Dime. Sure as heck ain’t worth anything now unless it’s 1964 and before. Keep Stacking

    • I pick wayward penny strays up where ever I find them.  I look at them and if they are pre-83 copper, (82′s could be either) I’ll keep them.  Hey, it’s a quick way to double your money…  :)
       

    • My wife loves playing the penny and two penny machines at the arcades where they push the coins down. Just to clear her change.
      I only let her use 1993 onwards UK coppers and as she won more I sifted out the 97% copper coins and gave her the steel rubbish.
      She enjoyed 15 minutes of fun like a kid, and we came out with twice as much as we went in with! Result all round I believe.
      JC

    • @Wendy
       
      LOL, I pick up all coins.
      Just the other day I went around a slush pile @walmart looking for coins. Found 1 cent and
      1 lead wheel weight.  The lead is good for casting boolitZ  ;)

  6. GREAT ANALYSIS of an ENEMY OPERATION:

    Yanno, it’s interesting.  I read a lot of the MSM anti-gold psyop disinformation work and it is almost comical to see what, at times, shows up like a game of, “Can YOU TOP THIS?”  But, underlying it all, it makes me imagine that some of these reporters must get paid a piece of the premiums for the amount of short-covering tonnage their specific BS is able to shake from the weak hands!  Perhaps it’s called Propanganda Premium???

    There’s a temptation to dismiss people like Ritholtz as ignorant, stupid people. I always remind those who would do this that Bloomberg doesn’t hire idiots and uneducated reporters. NO! These people are on the FRONT LINES in the Banker’s WAR AGAINST AMERICA!!! They are very dangerous agents and all of them ‘got the memo’ and know precisely their marching orders and how best to execute them.

    Consider this: Where might the physical gold prices be today in USD terms, were it not for the powerful, focused, and concerted anti-gold campaign that has mounted by the globalists in the MSM? I submit that this media misdirection psyop might, in fact, be far more effective at suppressing the price of the physical than even the most massive smashdowns in the paper markets…

  7. Waiting for silver
    Trying to convince the sheep is like barking up a dead cow’s ass.
    I’m not calling someone who uses debt death Federal Reserve Notes,  thinking it’s money, a brain damaged munquey fuque.
    Nope not me.
    Given my druthers I would rather conduct my commerce exclusively in junk bullion, silver and gold.  I’m just that kind of guy. 
    We  did shed a stack of Franklins on a small medical process for wifey today. The doc was willing to take FRNs but not silver.
    Maybe next time. This time he dodged the tax bullet. The next time I’ll convince him to dodge the Death Spiral FRN monster.

    Isn’t it time we all started feeling really badly about being able to buy silver at $20 an ounce? I mean, really!! 
    It should cause us no end of  pain that  we are taking advantage of the FRN illiterates and will have real money when the reset comes?
    Eh?  Anyone feeling guilty?
    I’m being a total s***.  Don’t answer that question.
    One more Zealotous Barbarian with a Schwingfraudian lust for gold bugs.

    • AG – what’s it like to ‘Bark up a dead cows arse’. Lol You crack me up.
      Funnily I don’t feel guilty in the slightest. In fact slam it down to $18 please, and I will toast their stupidity.
      JC

  8. One more thing
    Just yesterday the senate, lead by Hairy Weed, was unable to muster the votes to pass the unemployment compensation for the next 3 months.  According to what is being published, that means another 1,400,000 people will drop off the rolls.  IMO it’s unlikely they will find jobs in the near future. The Senate should be without jobs and see what that feels like. Justice will not be served on that any time soon but we can hope.
    Leaving aside  for a moment the pain of these people, many of whom see this unemployment cash transfer as their only financial life line,  if 1,400,000 people leave the rolls due to lack of passage of the bill, the unemployment will drop to 6%.  Unemployment dropped to 6.7% from 7% when 500,000 dropped from the rolls in December. Another 1,400,000 will cause the BLS to crow that we have near full employment at 6%. Ben Bernanke’s promise of stopping taper when this rate hits 6.5% will not become a reality. Maybe not.
    These people are hurting.  
    I hate to see government spend more but 1,400,000 dropping into poverty pains me no end. There is room in the budget to help them.
    The plight of these people is being played for political points just like the Obama’s decision in Afghanistan.  Politics placed before people destroys people.

  9. Interesting article. I don’t refute what the author says about the hatchet job Mr. Ritholtz says. Precious metals prices are heavily manipulated, particularly on paper. And people are kicking the goldbugs when they are down.
    But for now (and the next decade plus), metals are on their way DOWN. On any chart, they are technically broken…particularly year over year. I doubt we’ll have a deep down year like last year, but over the next few years, (I’ll just use gold) gold will EASILY retrace and dribble down to $600/oz. We’ll have some ups,but overall trend is down. I understand the ‘fiat’ arguments and such…and I AGREE with you on them…but as for now we have to play THEIR game. I don’t like it…but its what we got. FWIW, I collect many many coins…and I see buying opportunities as the metals go down.
    Just my €0.02

    • Hello, SR!
      Welcome to SD!
      If you are correct, that is likely to the advantage of many of us here @SD.
      But I believe something will break that spiral soon, but it would really mean
      TPTB lose control. If they keep their grip, I believe something like you say,
      and they will continue to bleed the country dry as long as possible.

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